Enclosed are the ramblings of one of the last of the baby-boomers. My thoughts are of Railroading, Automobiles, Design, Politics, Culture, Religion,and Parenthood.

Mile Post 370

Mile Post 370

Friday, February 12, 2016

Taxes

Taxes. It's the beginning of a new year and an election year at that, so we should discuss taxes. It is especially prescient as the (current) Obama Administration decided to "weaponize" the IRS against Conservatives. Its agent, Lois Lerner and Commissioner, John Koskinen have delayed, lied and obfuscated before Congress, in trying to get away from the Fact that they made it more difficult for conservative, "patriotic," or TEA Party groups (which usually vote Republican) to form 501-C-3 groups rather than groups that would be more Liberal or Progressive and would reliably vote Democrat. The issue here wasn't which party was aggrieved, but rather unequal treatment under the law. While I'm a conservative (note that I did not say republican) Richard Nixon was impeached by a Congress for abusing the power of his administration, in a lesser fashion. What has happened with the IRS under the Obama Administration is nothing less than criminal.Sir Isaac Newton's 3rd law of Motion states that "For every action there is an equal and opposite reaction." Basically, this means that when you step away, you are pushing off against the ground you were stepping on. If the ground were not attached, the ground would move away from you, with the same force and velocity that you are moving away from the curb (actually, you would move 1/2 of the distance and the ground would move 1/2 of the distance). It is also true in politics. As the IRS has been weaponized against one group of citizens, that group of citizens has pushed back in an incredible fashion. It has publicized its case and now has formerly uninterested citizens VERY INTERESTED in reigning in the powers of the IRS. As a result, many of the candidates for the Republi-crat (I call them this, as they have become so co-opted by the Democrat populist, progressive movement that they would be unrecognizable to Conservative Republicans such as Ronald Reagan or Barry Goldwater) candidates fro the 2016 Presidential Election want to get rid of the IRS and severely throttle any power that the IRS has.Before I go on,let's make one thing clear: No One Will EVER do away with the IRS. The Nation's taxes are required to fund the military and the government. There needs to be an agency to enforce the fair payment of taxes by a nations citizens - ALL OF ITS CITIZENS. However, when citizens see their tax dollars squandered, paying for things they did not want, going further into debt for things that are unnecessary, that has no purpose and has no business being funded by a government and should be funded by a private corporation if at all (e.g. high speed rail), then you get calls for ending the IRS and any taxation that is wasted on frivolous spending. So Rand Paul's call to end the IRS will never happen. However, you can get the next best things: Calls for a Fair Tax or a Flat Tax.

There are technically 3 types of Taxes that would hit everyone equivalently.

There is an income tax of equal rates, where everyone with an income, pays the same percentage, whether they are at the lowest or highest levels of income.

There is a consumption tax, where everyone that purchases anything is taxed at a certain equivalent rate.

There is a General Levy that would require everyone to pay a tax, despite whether that person had the income or savings required to pay it.

So we need to define what is Fair or what is Flat. Carly Fiorina (yes, I'm a fan and here is one of the reasons) discussed taxes, along with several other issues, with anchor Chris Wallace on the Nov. 29 edition of Fox News Sunday, in an interview with Chris Wallace (http://www.americanthinker.com/articles/2016/01/tax_advice_for_gop_presidential_candidates.html). Here’s a bit of what she said:A 73,000-page tax code is so complicated. This is how the government maintains power. […]The fundamental design philosophy, however, is lower every rate, close every loophole, […]This is what the government does. It takes away too much money and then with all those deductions and loopholes, it exerts power. […]If you go from 73,000 pages down to three pages, everybody’s ox gets gored -- every politician, every lobbyist, every accountant, every lawyer. The only people who benefit are the small, the powerless, the new business. […] The tax code, the complexity of government, favors the big, the powerful, the wealthy, the well-connected. It's called crony capitalism. […]If you level the playing field by simplifying, then you help the small, and the powerless, and the middle class.Candidate Fiorina has been criticized recently for not being specific enough about her tax plan. Actually, Ms. Fiorina has said plenty, but what she’s said may be so radical, so “paradigm-shifting,” that journalists can’t really grasp what she’s saying, which is: that she would eliminate every exception in the Tax Code, including the deductions for home mortgages and charity.If you want the lowest possible tax rate(s), then you need to accept ending all exceptions, as Fiorina advocates. Here's a speech given at the. Mises Institute, discussing the flat tax, the fair tax and a mean fee tax.https://mises.org/library/flat-tax-not-flat-and-fairtax-not-fairA mean fee tax (using the mathematical term "mean") is unrealistic, as many citizens could not afford to pay "the mean," due to their income being too low.

The Flat Tax is only Flat when ALL exceptions are removed from it (e.g. Earned Income Tax Credit, Minimum Threshold for Taxation of Income, Exemptions For Personal Use Real Estate Interest Paid and Donations to Religious or Non-Profit Charities). These groups have their lobbying arms, ready to go to Congress and fight for these exemptions, as do many others. Sure, it's a bumpy road that will be exploited by Democrats that cheer for the anarchists protesting the 1%, while posturing as Progressives and railing against Capitalism. And Ted Cruz has already gone there (http://www.forbes.com/sites/anthonynitti/2015/03/23/ted-cruz-to-run-for-president-why-his-plan-for-a-flat-tax-may-doom-his-candidacy/), and started sliding down that slippery slope. Worse still, Fair Tax is defacto Taxation for the Right to Live and because it's a National Sales Tax (which still allows an Income Tax, unless the 16th Amendment is Repealed).Carly Fiorina is right in saying that the Tax System needs to be simplified. It also needs to be:

Fair toward ALL who are governed by it.

Easy to Understand and File.

Enforcable.

Most Importantly, it needs to be modified where it CAN NEVER BE WEAPONIZED AGAINST ANY POLITICAL ENEMY in the future.

So her statement that "Everyone's ox gets 'gored'" must happen, otherwise the Flat Tax isn't flat: Those with mortgage payments, those with charitable deductions or having other" exemptions" from the tax (e.g. a minimum threshold or child tax credit) will pay less or even nothing.

However, there will always be a statistical group that makes so little, where they won't be able to afford a flat tax (for example 10%). In order to be sensitive to these citizens and not overburden them, we will have to give them some kind of break. The break must be small enough, so as not to discourage them when they make enough income to go to the standard tax rate.

As for me, I'm willing to end ALL of my deductions and live with a FLAT 10% across the board at any income level, whether I'm buying a house or contributing to a charity.

No comments:

Post a Comment

About Me

I'm one of the last of the Baby Boomers, married to another one of them. We live in middle class suburbia, in what used to be a small town, but is now a bedroom community of a City large enough to have a professional sports team.
We've raised 2 kids the old fashioned way, with my wife staying at home on a middle class income, while paying off debt. She home schooled both of them thanks to liberal home school laws , (however, we had to have them End of Grade Tested Each Year). We're politically conservative, Reformed Church Followers and Disciples of Christ. trying to live our lives with purpose.
I'm just trying to keep my head down and not bother anyone, but be available when someone needs me.